Yes, it starts introducing more colors earlier.
Pretty sure it's most noticeable on Round 8 but it's been awhile
This isn't true, Round 8 always has a variety of colors. Difficulty doesn't affect how many color types are on each stage, the patterns are static.
What the difficulty level affects in this game is how many shots you're given before the screen scrolls downward. You can test this easily on Round 1:
Level-1 = 8 shots before the screen falls on Round 1
Level-4 = 7 shots before the screen falls on Round 1 (default on Euro & Japanese bios)
Level-6 = 6 shots before the screen falls on Round 1 (default on US bios)
Level-8 = 5 shots before the screen falls on Round 1
The base value of how many shots you're given before the screen moves is based on how many total colored bubbles are left on the screen. Round 1 has 4 different colors, so the base value is 4. If you completely eliminate one of the colors, the value goes down accordingly. So if there's 3 colors on the screen, subtract 1 from each number here (it takes 6 shots before the screen scrolls on Level-4, etc).
Note that I only tested Levels 1, 4, 6, and 8. I do not know if there's anything different on 2, 3, 5, and 7, maybe further changes are made based on certain combinations of how many colors are left.